Whereas 2018 will be known as the year when the ECB reached the end of its monetary easing path – with the cessation of QE net purchases under which the ECB accumulated a bond portfolio worth €2.6 trillion over the course of close to four years – 2019 will mark the beginning of monetary tightening.

The world economy continued to grow strongly in 2018. Global economic output is likely to have increased by 3.1%, after a plus of 3.2% last year. While economic momentum in the USA even accelerated due to a strongly procyclical fiscal policy, growth slowed in most other economic regions.

As the parties to COP 24 gather in Katowice to agree on implementing the Paris agreement, there could be a step up towards the reality of assets having to leave the market and others coming to displace them.

The midterm elections and the resulting Democratically controlled House does not change our US economic outlook. GDP is still expected to grow by 2.9% in 2018, and 2.5% in 2019. However, businesses could be affected by policy shifts in six areas: infrastructure spending, regulation, taxes, public budget, trade and immigration

The ECB has committed itself to reinvesting the principal from maturing securities purchased under the Asset Purchase Program (APP) since 2014. But with monthly net purchases expected to end after an almost four-year run come January, the reinvestment policy will now take center stage in determining financial conditions in the eurozone until at least September 2019 when we expect the ECB to implement its first timid rate hike.

Turkey’s currency crisis became full-fledged in August amid an ongoing withdrawal of global liquidity stemming from continued monetary tightening in the U.S. as well as lasting economic policy mistakes.

Deregulation has been firmly on Trump’s agenda, with a recent bill easing rules for banks by watering down prudential standards and undoing some elements of the so-called Dodd-Frank law. However, while greater financial liberalization can contribute to higher long term growth, it can also encourage greater risk taking.